Friday, October 3, 2014

This is not Democracy: Poverty Report Contradicts GDP Claims

It is amazing how the government manages to continue selling Brooklyn
Bridges to a gullible public. Americans buy wars they don’t need and
economic recoveries that do not exist.

The best investment in America is a highly leveraged fund that
invests only in large cap companies that are buying back their own
stocks. Many of the firms repurchasing their stocks are borrowing in
order to push up their stock prices, executive “performance bonuses,”
and shareholders’ capital gains. The debt incurred will have to be
serviced by future earnings. This is not a picture of capitalism that
is driving the economy by investment.

Neither is consumer spending driving the economy. The US Census
Bureau’s 2013 Income and Poverty Report concludes that in 2013 real
median household income was 8 percent below the amount in 2007, the year
prior to the 2008 recession and has declined to the level in 1994, two
decades ago! http://www.census.gov/content/dam/Census/library/publications/2014/demo/p60-249.pdf
Even though real household income has not regained the pre-recession
level and has declined to the level 20 years ago, the government and
financial press claim that the economy has been in recovery since June
2009.

Neither is an increase in consumer debt driving the economy. The only growth in personal debt is in student loans.

Real retail sales (corrected with a non-rigged measure of inflation)
remain at the level of the bottom of the recession in 2009. Macy’s ,
J.C. Penny’s, and Sears store closings are further evidence of the lack
of retail sales growth, as is the fact that two of the three dollar
store chains are in trouble. Walmart’s sales are declining.

The basis of auto sales hype is subprime loans and leases taken by those who cannot qualify for a loan to purchase.

Housing starts remain far below the pre-recession level, which is not
surprising when available jobs are part-time with no benefits. Such
jobs cannot support the formation of households and purchase of homes.

Where does the government’s second quarter 2014 real GDP growth rate
of 4.6 percent come from? It comes from an understated inflation
measure and jiggled numbers. It is not a correct figure. Nothing has
occurred in the economy to turn it from a first quarter decline of more
than 2 percent into a second quarter growth of 4.6 percent.

The 4.6 percent number is pulled out of a hat to set the stage for the November election.

It is extraordinary that economists and the financial media permit
the government to get away with its false economic reporting. Of course
Wall Street likes good news . . . but fake news that misleads
investors and covers up economic policy mistakes?

Clearly, something is wrong with the government’s economic reporting.
It is not possible to have real GDP growth when real median family
incomes are declining and business investment consists of corporations
buying back their own shares. Either the government’s GDP estimate is
incorrect or the Census Bureau’s Income and Poverty report is incorrect.
Apparently Washington doesn’t understand that if it is going to rig
the numbers, it must rig all the numbers.

The rigged inflation measures create illusionary real GDP growth.
They also block cost-of-living adjustments to Social Security pensions.
Indeed, the main purpose of the rigged inflation measures is to get rid
of “socialistic” Social Security by allowing inflation to gradually
erode away the real values of “entitlements.” Republicans always want
to cut “entitlements” that people have paid for over their working
lifetime with the payroll tax. But Republicans never want to cut the
payroll tax. They need the revenues in order to bail out the big banks
and to pay for never-ending wars.

Washington has been conducting needless wars abroad for 93 percent of
the 21st century at a cost of trillions of dollars. More trillions
have been wasted bailing out banks that deregulation permitted to become
“too big to fail.” During the past seven years, millions of Americans
have lost their jobs and their homes, and food stamp rolls have reached
record numbers. These hurting Americans have been ignored by
policy-makers in Washington.

Clearly, government in America is focused on something different from
a healthy economy and the well being of citizens. We call it
democracy, but it’s not.

Quotes

"There is beauty in truth, even if it's painful. Those who lie, twist life so that it looks tasty to the lazy, brilliant to the ignorant, and powerful to the weak. But lies only strengthen our defects. They don't teach us anything, help anything, fix anything or cure anything. Nor do they develop one's character, one's mind, one's heart or one's soul." Jose Harris

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